Compliance officers face multiple options for credentials
NEW YORK, May 17 (Thomson Reuters Accelus) – The compliance officer role in heavily regulated industries, such as defense contracting, healthcare and financial services, is endowed with great responsibility. The compliance officer is charged with spotting risk and pursuing the policies and procedures that bring such exposures to levels deemed acceptable as contemplated by agency regulations and local and federal laws.
As the compliance position has grown to become more of a top-level role, and more firms have come to recognize it as an important component to its regulatory regime, there has been a surge in the number of training and certification programs dedicated to the exchange of compliance best practices. Furthermore, thanks to calamitous corporate governance failures that can largely be traced to lapses in appropriate risk monitoring and disclosure, as with Enron, WorldCom and Lehman Brothers for starters, and changes in corporate practices that mandate meetings between compliance professionals and boards of directors, the training that such professionals receive is ripe for discussion.
Certification and continuing education courses abound for compliance professionals, as the demand for their expertise grows and as they seek new jobs and higher wages. Membership groups and educational programs abound to help professionals increase their skills and understanding of the specific regulations in their industries — or to increase their proficiency at spotting risk and ethics lapses in general — while networking with like-minded peers.
Compliance hiring experts said the programs can be particularly useful to new professionals or to others seeking to enrich their networks.
The compliance professional has multiple kinds of training programs, certifications, continuing education credits and e-learning offerings to choose from, all of them offering critical skills training, and each of them advertising a different approach. This article surveys some of the offerings – but the selection of programs to discuss does not constitute an endorsement or comment on their merit.
Courses, certifications and credentials
National Regulatory Services (NRS) offers compliance professionals at investment advisor firms the opportunity to participate in conferences, e-learning, core coursework and a certification program. In 2007, the Investment Adviser Association (IAA) agreed to co-sponsor the NRS’ suite of training programs.
“These programs promote professionalism in the compliance function and give students a credential they can use to advance,“ says David Tittsworth, executive director at IAA. “Compliance is still a relatively new position in firms; the person who occupies the role must show his or her competency. This is where training comes into play.”
Launched in 2005, the NRS designed a certification program that offers courses online and in person, with instructors drawn from the SEC, law firms and from the chief compliance officer or general counsel offices of large corporations. Drawing on the SEC’s Compliance Program Rule, announced in 2003, NRS responded to the mandate that investment advisers must designate a compliance professional who has the ear of top management, and created coursework to train people for the role.
The IAA helps NRS keep its content up-to-date by consulting experts in financial services and education experts to make sure the course materials and testing are up to par each year.
There is a $2,000 core training program that entails taking 10 courses and receiving a certificate (but not a certification or credential) and a 20-course program that costs $4,700, with a final examination that enables participants to receive a designation of “IACCP,” or Investment Adviser Certified Compliance Professional.
“We have seen an influx of participants coming from private funds, now that such funds need to register as investment advisers and need a compliance officer,” says John Grebauer, NRS president.
“We are focused on SEC-registered advisers, and we are increasingly offering state-specific content coverage where applicable, such as custody regulations and private fund exemptions,” Grebauer notes. “While we cannot cover every regulation and rule, we give students the skills to know how to find the rule, when to apply it and how to stay on top of the changes affecting their business.”
Students enrolled in the core training and the IACCP certification training typically hail from medium to large-sized firms who are just beginning to have a dedicated compliance officer or whose compliance team just got larger. Some FINRA regulators and state examiners have taken the courses as well.
Wendy Laidlaw, a graduate of the IACCP program and a member of the IAA for 16 years, explained how she retains her IACCP designation. “I take 12 hours of training per year to maintain it. You can satisfy the requirement with coursework offered by other entities other than the NRS, but you need to have it approved by NRS as being sufficiently rigorous and well-rounded.”
Wendy is a co-owner of her wealth management business, so she does not necessarily need the IACCP designation for career advancement or job security. She sees it as helpful in this manner for her staff, though. “It really says something about someone who is willing to take a course, sit and take a difficult exam that you can fail, and to do so voluntarily.”
The Society of Corporate Compliance and Ethics (SCCE) offers a variety of exam-optional compliance “academies” across the country that last four days and are labeled “basic compliance and ethics” training. The Certified Compliance and Ethics Professional Program (CCEP) designation is conferred upon those who pass the optional examination. The program, inaugurated in 2002 and taught by experienced compliance officers, requires compliance personnel to have one year of experience before taking the course.
The program is offered in a variety of locations throughout the year, from Sao Paulo and Brussels to Scottsdale and Boston. The compliance training is not targeted to the financial professional only; it is a broader-based training that also aims to help compliance professionals coming from industries including healthcare, utilities and pharmaceuticals learn how to assess risk and identify proper procedures for rectifying them.
“The reason we can teach across all of these industry spaces is because we teach along the parameters of the seven elements of the Federal Sentencing Guidelines,” explains Debbie Troklus, managing director of Aegis Compliance and Ethics Center and a dean for the SCCE’s academies.
The Federal Sentencing Guidelines were revised in 2004, and chapter 8 is designed with corporate entities in mind: Its seven elements are designed to provide the actions, policies and incentives for organizations to design and maintain the mechanisms for preventing, detecting and reporting criminal conduct at their firms. A critical component of this self-policing program is maintaining a compliance and ethics program designed to prevent and detect criminal conduct by employees and executives, whatever the industry.
“The certification exam on the fourth day of the academy is based on this chapter of the guidelines,” Troklus explains. “We approach the topic of compliance and ethics from this standpoint — the principle that you have to take certain steps to maintain an effective compliance program at any firm.”
Up to 75 students attend each of the academies, with the three non-U.S. academies drawing just a little less in number. Course materials are $349 ($395 for the video) and the curriculum revolves around policies and procedures; communications and training; internal reporting and auditing; discipline and response; and risk assessment.
Another organization that takes a broad approach in training compliance professionals across a variety of industries is the Ethics and Compliance Officer Association (ECOA), which targets senior compliance officers and chief ethics officers. The ECOA wants its program to be as suitable for professionals from Ford Motor Company as those hailing from Pfizer because its training teaches students how to establish the internal controls and code of ethics necessary to maintain best practices, regardless of the regulatory entity.
The coursework takes eight months to complete — 120 hours – plus five additional e-learning courses to take. It is offered through New York University’s continuing education and professional studies department.
“Our program is called ‘APEX,’ which stands (loosely) for ‘Advanced Practitioner in Ethics & Compliance’ and is just 18 months old. But it is rigorous, and our students choose us because we look across the spectrum of industries at general ethics and compliance principles,” states Tim Mazur, chief operating officer.
The ethics and compliance officers in the most recent program offered by ECOA came mainly from the energy, healthcare, manufacturing, retail and utilities sectors, but some large financial services firms sent their compliance personnel. Mazur expects that number to rise.
“Our coursework is taken electronically,” Mazur explains. “Then the students have a practicum to complete. Finally, they take a certification exam that is done in person. The sessions are designed to help participants manage hotlines, handle sexual harassment claims, deal with whistleblowers and understand the anti-retaliation provisions of Dodd-Frank — the critical components of what every compliance officer should know.”
Mazur notes that the APEX program’s broad curriculum appeals to a variety of ethics and compliance professionals who wish to be nimble, acquiring a variety of marketable skills that they can apply to different employers. “Our students can switch industries and carry their training with them; many regulatory compliance certification programs cannot say as much,” he notes.
The CCRP at Pace University
Educational opportunities also exist for professionals seeking specialized compliance training.
The Certified Compliance and Regulatory Professional (CCRP) is a six-month, 75-hour and 25-session .certificate program designed to provide compliance training for professionals working at foreign banks doing business in the United States.
“The CCRP is not for broker-dealers or investment advisers. It is just for those working in foreign banks on U.S. soil, with the understanding that these professionals need to know how to deal with their specific auditors and examiners — both the cross-border ones and the more local ones,” says John Allan (Jack) James, executive director of the program and an international expert on how corporations are governed.
Pace University in New York, where James serves as a professor, established the Center for Global Governance, Reporting and Regulation, and the CCRP is being offered under its banner. Since there are nearly 100 branches and agencies of foreign banks doing business in the United States, there is no dearth of professionals to service.
“Foreign banks with U.S. offices have some level of confusion over how to comply with the PATRIOT Act, Volcker Rule, Foreign Account Tax Compliance Act (FATCA), living wills requirements, the three Basel accords and other regulations. Specific experts from each area that we cover teach the subjects — letting our students what they need to know right now, with some predictions for the future,” James explains. “We teach them even more than the core subjects, though; we teach them how to deal with uncertainty, because this is what risk management is all about.”
“We want our students to be able to assess if their parent companies are living up to American standards by having a comprehensive risk management system in place,” he notes. By way of an example, James says: “If your branch in Kuala Lumpur does a trade with non-Americans, does the U.S. office have to report it to the U.S. government, and if so, by when and how?”
There are two courses, priced at $2,500 each plus a registration fee, and graduate credit at Pace comes with successful completion the two. Course 1 is more general and covers comparative corporate governance and regulatory strategy, and course 2 drills down into issues as specific as the IT challenges unique to compliance professionals. The sessions are videotaped, so a student can retrieve a prior session that was missed.
James hopes the courses teach students to link compliance with regulations to the operations of a company, and risk management in general to credit risk and reputational risk more specifically. And he trusts that students will learn how to interact with the many agencies they must report to on these shores and abroad.
The Financial Industry Regulatory Authority (FINRA) offers an intensive six-day course through the Wharton School at the University of Pennsylvania. This program, called the FINRA Institute, was designed purely for financial services professionals, and its mission is to confer a broad understanding of the regulations and laws that impact broker-dealers or broker-dealer/investment adviser hybrid firms.
Taught by UPenn business and law school professors and industry professionals, the course covers all aspects of the Securities Exchange Act, the Investment Company Act, Blue Sky Laws and self-regulatory organization regulations. FINRA sends it own employees to the program.
“To be honest, I chose the program for the Wharton name and the name of the regulator endorsing it,” says David Martin, president of Keystone Capital Corporation in San Diego and a FINRA Institute graduate. “The course coverage was perfectly tailored to anyone in the broker-dealer field and the networking with peers was terrific. There were compliance officers, traders, advisers, FINRA employees, attorneys and securities principles all interacting and exchanging ideas.”
The Institute provides an overview of how broker-dealer regulations developed to give students an appreciation for why they exist, not just how they should be applied. Upon completion of the course and the final examination, a Certified Regulatory and Compliance Professional (CRCP) degree is awarded. To keep the certification valid, students must complete 12 hours of continuing education every three years using a variety of pre-approved and FINRA-designed conferences, e-learning, online workshops and webinars that confer a number of credits, depending on the topic and duration of the session chosen.
Since Martin is now in a position to hire and fire within his firm, he notes that programs like the FINRA Institute help them create a process for reviewing an employee’s performance. This is particularly important in light of FINRA Rule 3130(b), which mandates that FINRA members have both a designated compliance officer and a process in place for reviewing and testing its policies, plus a way to assess its compliance officer’s progress in achieving compliance with the FINRA regulations.
“I am required by the FINRA rules to have a supervisory system in place at my firm that is designed to achieve compliance with the rules and to benchmark my compliance team’s performance. I am also a hiring manager. If I see that an employee has attained the CRCP, that’s one good indicator that he or she is qualified to take on the compliance role,” Martin says.
The cost of the FINRA Institute, including the meals, lodging and course materials is $8,650 for students from FINRA member firms; those from non-member firms or who have no firm sponsoring them must pay $9,450.The program offers scholarships, however.
Assessing the professional currency of coursework, credentials
Given the expense of attendance, what do certification and training programs confer on their participants? Can we monetize the value of the effort and achievement?
“These training program credentials are most helpful for the individual who has never done the compliance officer’s job before,” said David Symes, managing director of Compliance Recruitment Solutions, offices on Wall Street and in London. “It’s an attractive feature as a prospective candidate, but less relevant to advancement in the profession.”
“I think the compliance professional with some experience under his or her belt gains more from the networking advantages offered through the training sessions than from having the new certification credentials added after his or her name,” Symes said. “In fact, having more than two credentials after your name can serve to obscure the one that is most relevant to your current position or the one you are seeking.”
Should new compliance professionals enroll in courses that cater to knowing mainstream compliance concepts, or in those programs that are more specific in their teaching?
“Those who are focusing on anti-money laundering might want to focus on training programs that are AML-focused. Most other compliance professionals should seek a broader offering of securities regulation coverage,” he said.
Symes stressed that most compliance certifications cannot compete with the value of having FINRA’s Series 7 and Series 63 licenses. People who pass these examinations can show that they have an understanding of the products their firms are selling and how their firms can lawfully sell them under federal and state regulations.
“In the UK, these licenses are required to show that you are worthy of making it past the junior ranks in the compliance department. It is not mandatory to be so licensed in the United States in the compliance role, but it certainly looks attractive to have obtained them,” he notes.
Is this a good time to enroll in a certification program or obtain a license, such as the Series 7 or 63?
“Using an economic downturn to your advantage means doing a bit more — and taking a well-regarded training course and getting a certification is helpful in these periods,” observes Suzanne Richard, president of Fortune Personnel Consultant in Fort Washington, Pa.
“I think that the alphabet soup of credentials after your name starts to look really silly,” she says. “But a strategy that never fails the job hunter — or the person seeking a promotion — is to stay connected, and these trainings can a good place to do that and distinguish oneself from the competition.”
The candidate who has the most to gain from a certification, she notes, is the person without an advanced degree. Symes agrees. A law degree, business degree, CFA (chartered financial analyst designation) or CFP (certified financial planner distinction) are still the best credentials to have in one’s pocket when seeking a compliance role or to advance in one’s job.
(This article was produced by the Compliance Complete service of Thomson Reuters Accelus. <a href=”http://accelus.thomsonreuters.com/solut ions/regulatory-intelligence/compliance- complete/” target=_new”>Compliance Complete</a> provides a single source for regulatory news, analysis, rules and developments, with global coverage of more than 230 regulators and exchanges.)